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Consumer Movement

Published on September 15, 2003.

The growing power of American consumers in the early decades of the 20th century prompted Congress to enact legislation designed to protect the public from unsafe products and services and to regulate business activities. In 1914, Congress passed the Federal Trade Commission Act establishing an agency with the power to issue cease-and-desist orders against businesses that used unfair methods of competition. Later the same year, Congress passed the Clayton Act, a law that supplemented the Sherman Antitrust Act and held that corporate officials who violate the act can be held individually responsible for damages.

During the 1920s, Stuart Chase and Frederick Schlink wrote "Your Money's Worth," the first anti-advertising book. Mr. Schlink later formed Consumers' Research, an early group that published reviews of manufacturers' products.

The 1930s gave rise to the notion of the consumer as a vital component of economic policy, alongside capital and labor. In 1933, the Consumers' Council of the Department of Agriculture came into being. The group represented the public at all Department of Agriculture hearings and disseminated consumer information. The Consumers' Guide, the official publication of the council, advised consumers on how to make wise and informed purchases, and upheld the rights of consumers to full and correct information on prices, quality of commodities and costs and efficiency of distribution.

Congress amended the Clayton Act in 1936 with the passage of the Robinson-Patman Act. The amendment defined price discrimination as unlawful and empowered the FTC to establish limits on quantity discounts, forbid brokerage allowances except to independent brokers and prohibit promotional allowances or the furnishing of services or facilities except where made available to all on proportionately equal terms.

In 1938, Congress passed the Wheeler-Lea Act prohibiting unfair and deceptive acts and practices regardless of the impact on competition; it also gave the FTC jurisdiction over food and drug advertising. The 1946 Lanham Trademark Act required that trademarks be distinctive and made it illegal to make any false representation of goods or services entering interstate commerce.

The 1958 Automobile Information Disclosure Act prohibited car dealers from inflating the factory price of new cars. Also in 1958, the National Traffic & Safety Act provided for the creation of compulsory safety standards for automobile and tires.

The 1960s

In the 1960s, Rachel Carson's "Silent Spring" (1962) is often credited with initiating the U.S. environmental movement. In 1965, Ralph Nader published "Unsafe at Any Speed," an expose of the automobile industry that targeted General Motors Corp.'s Corvair, a vehicle deemed a road hazard by many. Although GM attempted to discredit Mr. Nader and his claim that the popular Corvair was dangerous, its efforts merely added impetus to the growing trend toward consumer activism.

In addition, Mr. Nader created consumer advocacy groups, called Public Interest Research Groups, on college campuses that investigated baby food, insecticides, unfair insurance rates, and coal mine and natural gas pipeline safety.

In 1966, Congress again acted on the consumer's behalf by passing the Fair Packaging & Labeling Act, which required manufacturers to list package contents and the proportions of ingredients. Also in 1966, Congress passed the Child Protection Act, which banned the sale of hazardous toys and articles. It was amended in 1969 to include items that posed electrical, mechanical or thermal hazards.

In 1967, Congress enacted landmark consumer legislation with passage of the Federal Cigarette Labeling & Advertising Act, requiring cigarette packages to display the phrase, "Warning: The Surgeon General has determined that cigarette smoking is dangerous to your health."

The Truth-in-Lending Act of 1968 protected consumers by requiring lenders to state the true costs of a credit transaction. It also outlawed the use of actual or threatened violence in collection of loans and restricted the amount of garnishments.

The environment became the focus of regulation in 1969 with passage of the National Environmental Policy Act, which established the Council on Environmental Quality. In 1970, Congress passed the Fair Credit Reporting Act, which ensured that consumers' credit reports would contain only accurate, relevant and recent information and that the reports were confidential unless requested for an appropriate reason by a proper party.

The '70s and '80s

In 1972, the Consumer Product Safety Act established the Consumer Product Safety Commission and authorized it to set safety standards for consumer products and to exact penalties for failure to uphold the standards. Three years later, the Consumer Goods Pricing Act safeguarded consumers by prohibiting the use of price maintenance agreements among manufacturers and resellers engaged in interstate commerce.

Consumers were further empowered with passage in 1975 of the Magnuson-Moss Warranty/FTC Improvement Act, which authorized the FTC to set rules concerning consumer warranties. It also expanded the regulatory powers of the FTC and gave consumers further means for redress with the enactment of "class action" suits against manufacturers.

Also in 1975, the Equal Credit Opportunity Act expressly prohibited discrimination in credit transactions on the grounds of sex, marital status, race, national origin, religion, age or receipt of public assistance. In 1978, the Fair Debt Collection Practice Act made it illegal to abuse any person and make false statements or use unfair methods when collecting a debt.

Congress further strengthened the consumer movement with the FTC Improvement Act in 1980 and the Toy Safety Act in 1984. The FTC Improvement Act provided the House of Representatives and the Senate jointly with veto power over FTC trade regulation rules. The Toy Safety Act gave the government expanded power to quickly recall toys that were found to be unsafe. In 1990, the Nutrition Labeling & Education Act required that food manufacturers clearly label detailed nutritional information on food packaging.

Consumerism and advertising

An intricate network of consumer information groups—including organizations such as the Consumer Federation of America, the National Council of Senior Citizens, the National Consumer League and the National Stigma Clearinghouse—continually investigates advertising complaints and conducts campaigns to halt objectionable advertising.

In addition to self-regulation among ad agencies, the industry has established a network of professional affiliations to monitor itself. This network includes advertising publications that seek to educate advertisers about current issues and legislation and professional trade associations that monitor the ad industry for abuses. Three of the most prominent member groups are the Association of National Advertisers, the American Association of Advertising Agencies and the American Advertising Federation.

Together, the Council of Better Business Bureaus, Four A's, AAF and ANA established the National Advertising Review Council in 1971 to promote and enforce standards of truth, accuracy, taste, morality and social responsibility in advertising.